Punjab ministers slash VAT on Natural Gas from 14.3% to 3.3%

Tribune News Service 
Sultanpur Lodhi, September 10

In a significant decision aimed at encouraging industries to shift to the eco-friendly gas, the Punjab Council of Ministers on Tuesday decided to cut down VAT on Natural Gas, in Gaseous State other than Compressed Natural Gas, from 14.3 per cent to 3.3 per cent.

Chairing the cabinet meet, Chief Minister Captain Amarinder Singh said the move would help cut down on industrial pollution in the state. 

At present, the rate of VAT on Natural Gas is 13 per cent+10 per cent surcharge, i.e. 14.30 per cent in Punjab. The major consumer of Gas is National Fertilisers Limited (NFL), which uses the gas at its plants at Bathinda and Nangal. 

Before March 2015, VAT rate on Natural Gas was 5.5 per cent+10 per cent, surcharge i.e. 6.05 per cent. From March 2015 onwards, VAT rate on Natural Gas was increased from 6.05 per cent to 14.3 per cent. 

Due to increase in VAT rate, NFL started interstate billing of Natural Gas, due to which VAT collection on Natural Gas decreased. 

The VAT collection on natural gas from the years 2014-15 to 2018-19 came down considerably—from Rs. 105.77 crore to Rs. 5.67 crore, which had further shown a steep decline to Rs. 1.84 crore till June 2019, during financial year 2019-20.

It may be noted that NFL is purchasing natural gas worth Rs. 300 crore per month from Gujarat, on which CST of Rs. 45 crore per month at the rate of 15per cent is being paid to that state. 

In case the VAT rate on natural gas is decreased, the natural gas supplier may start billing of natural gas to NFL from Punjab, which can lead to increase in PVAT collection on natural Gas, said an official spokesperson, explaining the rationale behind the Cabinet decision.